Burke & Herbert Financial Services Corp.

Previous wording

Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based on current beliefs, expectations, or assumptions regarding the future of the business, future plans and strategies, operational results, and other future conditions of the Company. All statements other than statements of historical fact included in this Form 10-Q regarding the prospects of our industry or our prospects, plans, financial position, or business strategy may constitute forward-looking statements. In addition, forward-looking statements generally can be identified by the use of forward-looking words such as “plans,” “expects” or “does not expect,” “is expected,” “look forward to,” “budget,” “scheduled,” “estimates,” “forecasts,” “will continue,” “intends,” “the intent of,” “have the potential,” “anticipates,” “does not anticipate,” “believes,” “should,” “should not,” or variations of such words and phrases that indicate that certain actions, events, or results “may,” “could,” “would,” “might,” or “will,” “be taken,” “occur,” or “be achieved,” or the negative of these terms or variations of them or similar terms. Additionally, forward–looking statements speak only as of the date they are made; the Company does not assume any duty, does not undertake, and specifically disclaims any obligation to update such forward–looking statements, whether written or oral, that may be made from time to time, whether because of new information, future events, or otherwise, except as required by law. Furthermore, because forward–looking statements are subject to assumptions and uncertainties, actual results or future events could differ, possibly materially, from those indicated in or implied by such forward-looking statements because of a variety of factors, many of which are beyond the control of the Company. Further, factors identified herein are not necessarily all of the factors that could cause the Company’s actual results, performance or achievements to differ materially from those expressed in or implied by any of the forward-looking statements. Other factors, including unknown or unpredictable factors, also could harm the Company. Accordingly, you should consider all of these risks, uncertainties and other factors carefully in evaluating all such forward-looking statements made by the Company and not place undue reliance on forward-looking statements. The risks and uncertainties that could cause actual results to differ from those described in the forward-looking statements include, but are not limited to, the following: costs or difficulties associated with newly developed or acquired operations; changes in general economic, political, or market trends (either nationally or locally in the areas in which we conduct, or will conduct, business), including inflation, changes in interest rates, market volatility and monetary fluctuations, and changes in federal government policies and practices, including the impact of the federal …

Excerpt shortened here; the source contains the full paragraph.

Current wording

Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based on current beliefs, expectations, or assumptions regarding the future of the business, future plans and strategies, operational results, and other future conditions of the Company. All statements other than statements of historical fact included in this Form 10-Q regarding the prospects of our industry or our prospects, plans, financial position, or business strategy may constitute forward-looking statements. In addition, forward-looking statements generally can be identified by the use of forward-looking words such as “plans,” “expects” or “does not expect,” “is expected,” “look forward to,” “budget,” “scheduled,” “estimates,” “forecasts,” “will continue,” “intends,” “the intent of,” “have the potential,” “anticipates,” “does not anticipate,” “believes,” “should,” “should not,” or variations of such words and phrases that indicate that certain actions, events, or results “may,” “could,” “would,” “might,” or “will,” “be taken,” “occur,” or “be achieved,” or the negative of these terms or variations of them or similar terms. Additionally, forward–looking statements speak only as of the date they are made; the Company does not assume any duty, does not undertake, and specifically disclaims any obligation to update such forward–looking statements, whether written or oral, that may be made from time to time, whether because of new information, future events, or otherwise, except as required by law. Furthermore, because forward–looking statements are subject to assumptions and uncertainties, actual results or future events could differ, possibly materially, from those indicated in or implied by such forward-looking statements because of a variety of factors, many of which are beyond the control of the Company. Further, factors identified herein are not necessarily all of the factors that could cause the Company’s actual results, performance or achievements to differ materially from those expressed in or implied by any of the forward-looking statements. Other factors, including unknown or unpredictable factors, also could harm the Company. Accordingly, you should consider all of these risks, uncertainties and other factors carefully in evaluating all such forward-looking statements made by the Company and not place undue reliance on forward-looking statements. The risks and uncertainties that could cause actual results to differ from those described in the forward-looking statements include, but are not limited to, the following: the possibility that the anticipated benefits of the LNKB Merger will not be realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the two companies or as a result of the strength of the economy and competitive factors in the areas where the Company does business; the possibility that we may be unable to achieve expected synergies and operating ef…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

Burke & Herbert Financial Services Corp. was organized as a Virginia corporation in 2022 to serve as the holding company for Burke & Herbert Bank & Trust Company. The Company became a bank holding company when it commenced operations on October 1, 2022, following a reorganization transaction in which it acquired control of the Bank under the BHCA. This transaction was treated as an internal reorganization as all shareholders of the Bank became shareholders of the Company. The Company has no material operations other than owning the Bank. In September 2023, the Company elected to become a financial holding company under the BHCA. As a financial holding company of a Virginia state bank, the Company is subject to regulation, supervision, and examination by the Federal Reserve and the Virginia BFI. The Bank is a Virginia chartered commercial bank that commenced operations in 1852. The Bank became a member of the Federal Reserve System on December 31, 2024. The Bank is subject to regulation, supervision, and examination by the Federal Reserve (through the Federal Reserve Bank of Richmond) and the Virginia BFI.

Current wording

Burke & Herbert was organized as a Virginia corporation in 2022 to serve as the holding company for the Bank. Burke & Herbert became a bank holding company when it commenced operations on October 1, 2022, following a reorganization transaction in which it acquired control of the Bank under the BHCA. This transaction was treated as an internal reorganization as all shareholders of the Bank became shareholders of Burke & Herbert. Burke & Herbert has no material operations other than owning the Bank. In September 2023, Burke & Herbert elected to become a financial holding company under the BHCA. As a financial holding company of a Virginia state bank, Burke & Herbert is subject to regulation, supervision, and examination by the Federal Reserve and the Virginia BFI. The Bank is a Virginia chartered commercial bank that commenced operations in 1852. The Bank became a member of the Federal Reserve System on December 31, 2024. The Bank is subject to regulation, supervision, and examination by the Federal Reserve (through the Federal Reserve Bank of Richmond) and the Virginia BFI.

Previous wording

The Bank’s primary market area includes northern Virginia and West Virginia, and it has over 77 branches and commercial loan offices across Delaware, Kentucky, Maryland, Virginia, and West Virginia. The Company’s branch locations accept business and consumer deposits from a diverse customer base. The Company’s deposit products include checking, savings, and term certificate accounts. The Company’s loan portfolio includes commercial and consumer loans, a substantial portion of which are secured by real estate.

Current wording

The Bank’s primary market area includes northern Virginia and West Virginia, and as of March 31, 2026, it has over 77 branches and commercial loan offices across Delaware, Kentucky, Maryland, Virginia, and West Virginia. The Company’s branch locations accept business and consumer deposits from a diverse customer base. The Company’s deposit products include checking, savings, and term certificate accounts. The Company’s loan portfolio includes commercial and consumer loans, a substantial portion of which are secured by real estate.

Previous wording

As of September 30, 2025, we had total consolidated assets of $7.9 billion, gross loans of $5.6 billion, total deposits of $6.4 billion, and total shareholders’ equity of $822.2 million. As of September 30, 2025, we had 829 full-time employees. None of our employees are covered by a collective bargaining agreement.

Current wording

As of March 31, 2026, we had total consolidated assets of $7.9 billion, gross loans of $5.4 billion, total deposits of $6.3 billion, and total shareholders’ equity of $864.5 million. As of March 31, 2026, we had 830 full-time employees. None of our employees are covered by a collective bargaining agreement.

Previous wording

For acquisitions, we are required to record the assets acquired, including identified intangible assets such as core deposit intangibles, and the liabilities assumed at their respective fair values. The difference between consideration and the net fair value of assets acquired is recorded as goodwill. Management uses significant estimates and assumptions to value such items, including projected cash flows, repayment rates, default rates and losses assuming default, discount rates, and realizable collateral values. The allowance for credit losses for PCD loans is recognized within acquisition accounting. The allowance for credit losses for non-PCD assets is recognized as provision for credit losses in the same reporting period as the acquisition. Fair value adjustments are amortized or accreted into the income statement over the estimated life of the acquired assets or assumed liabilities. The purchase date valuations and any subsequent adjustments determine the amount of goodwill recognized in connection with the acquisition. The use of different assumptions could produce significantly different valuation results, which could have material positive or negative effects on our results of operations. The carrying value of goodwill recorded must be reviewed for impairment on an annual basis, as well as on an interim basis if events or changes indicate that the asset might be impaired. An impairment loss must be recognized for any excess of carrying value over fair value of the goodwill.

Current wording

For acquisitions, we are required to record the assets acquired, including identified intangible assets such as core deposit intangibles, and the liabilities assumed at their respective fair values. The difference between consideration and the net fair value of assets acquired is recorded as goodwill. Management uses significant estimates and assumptions to value such items, including projected cash flows, repayment rates, default rates and losses assuming default, discount rates, and realizable collateral values. The allowance for credit losses for purchased credit deteriorated (“PCD”) and purchased seasoned loans (“PSL”) loans is recognized within acquisition accounting. The allowance for credit losses for non-PCD and non-PSL assets is recognized as provision for credit losses in the same reporting period as the acquisition. Fair value adjustments are amortized or accreted into the income statement over the estimated life of the acquired assets or assumed liabilities. The purchase date valuations and any subsequent adjustments determine the amount of goodwill recognized in connection with the acquisition. The use of different assumptions could produce significantly different valuation results, which could have material positive or negative effects on our results of operations. The carrying value of goodwill recorded must be reviewed for impairment on an annual basis, as well as on an interim basis if events or changes indicate that the asset might be impaired. An impairment loss must be recognized for any excess of carrying value over fair value of the goodwill.

Previous wording

The Company is using an internally developed model that produces an estimate of the allowance for credit losses as the lifetime expected credit losses of the loan portfolio. This model uses a remaining useful life or WARM method within defined-contractual terms by federal call codes. The model forecasts net charge-off rates by call codes using ordinary least squares (“OLS”) regression models that use macroeconomic variables to forecast the Company’s and peer banks’ net charge-off rates. These models are used to produce reasonable and supportable forecasts of net charge-off rates. The macroeconomic variables utilized by the Company include variables that meet defined criteria in forecasting credit losses for our loan portfolio. These variables include, but are not limited to, unemployment rates, housing and commercial real estate prices, gross domestic product levels, equity market conditions or interest rates, as well as other variables that are portfolio-specific, such as those pertaining to commercial real estate or to residential loan portfolios. The Company sources the macroeconomic variables and the macroeconomic variable forecasts that it uses in its ACL model from the Standard & Poor’s Global Market Intelligence and from CoStar Group.

Current wording

The Company is using an internally developed model that produces an estimate of the allowance for credit losses as the lifetime expected credit losses of the loan portfolio. This model uses a remaining useful life or weighted average remaining maturity (“WARM”) method within defined-contractual terms by federal call codes. The model forecasts net charge-off rates by call codes using ordinary least squares (“OLS”) regression models that use macroeconomic variables to forecast the Company’s and peer banks’ net charge-off rates. These models are used to produce reasonable and supportable forecasts of net charge-off rates. The macroeconomic variables utilized by the Company include variables that meet defined criteria in forecasting credit losses for our loan portfolio. These variables include, but are not limited to, unemployment rates, housing and commercial real estate prices, gross domestic product levels, equity market conditions or interest rates, as well as other variables that are portfolio-specific, such as those pertaining to commercial real estate or to residential loan portfolios. The Company sources the macroeconomic variables and the macroeconomic variable forecasts that it uses in its ACL model from the Standard & Poor’s Global Market Intelligence and from CoStar Group.

Previous wording

The Company currently has set an initial reasonable and supportable period of two years with a subsequent straight-line loss-rate reversion for the following four quarters before then utilizing historical average loss rates in remaining periods of the modeled contractual terms. Based on management’s analysis, adjustments may be applied for additional factors impacting the risk of loss in the loan portfolio beyond information used to calculate reasonable and supportable, reversion and post-reversion period forecasts on collectively evaluated loans. As the reasonable and supportable and reversion period forecasts reflect the use of the macroeconomic variable loss drivers, management may consider that an additional or reduced reserve is warranted through qualitative risk factors based on current and expected conditions, including those that utilize supplemental information relative to the macroeconomic variable loss drivers. Qualitative adjustments considered by management include the following: (i) management’s assessment of macroeconomic forecasts used in the model and how those forecasts align with management’s overall evaluation of current expected credit conditions; (ii) organization specific risks such as credit concentrations, collateral specific risks, nature and size of the portfolio, and external factors that may ultimately impact credit quality; and (iii) underwriting and delinquency trends. The qualitative factors applied at September 30, 2025, and the importance and levels of the qualitative factors applied, may change in future periods depending on the level of changes to items such as the uncertainty of economic conditions and management’s assessment of the level of credit risk within the loan portfolio as a result of such changes, compared to the amount of ACL calculated by the model. Management reviews supplemental data sources including historical net charge-off rates and data measuring other specific credit outcomes from its systems of record in supporting qualitative factors. However, qualitative factor evaluations are inherently imprecise and require significant management judgment.

Current wording

The Company currently has set an initial reasonable and supportable forecast period of two years with subsequent immediate reversion to the historical average loss rates in remaining periods of the modeled contractual terms. Based on management’s analysis, adjustments may be applied for additional factors impacting the risk of loss in the loan portfolio beyond information used to calculate reasonable and supportable forecast and the subsequent reversion to historical loss information on collectively evaluated loans. As the reasonable and supportable forecast and reversion period forecast reflects the use of the macroeconomic variable loss drivers, management may consider that an additional or reduced reserve is warranted through qualitative risk factors based on current and expected conditions, including those that utilize supplemental information relative to the macroeconomic variable loss drivers. Qualitative adjustments considered by management include the following: (i) management’s assessment of macroeconomic forecasts used in the model and how those forecasts align with management’s overall evaluation of current expected credit conditions; (ii) organization specific risks such as credit concentrations, collateral specific risks, nature and size of the portfolio, and external factors that may ultimately impact credit quality; and (iii) underwriting and delinquency trends. The qualitative factors applied at March 31, 2026, and the importance and levels of the qualitative factors applied, may change in future periods depending on the level of changes to items such as the uncertainty of economic conditions and management’s assessment of the level of credit risk within the loan portfolio as a result of such changes, compared to the amount of ACL calculated by the model. Management reviews supplemental data sources including historical net charge-off rates and data measuring other specific credit outcomes from its systems of record in supporting qualitative factors. However, qualitative factor evaluations are inherently imprecise and require significant management judgment.

Previous wording

The Company’s income tax expense, deferred tax assets and liabilities, and reserves for unrecognized tax benefits reflect management’s best assessment of estimated taxes due. The calculation of each component of the Company’s income tax provision is complex and requires the use of estimates and judgments in its determination. As part of the Company’s evaluation and implementation of business strategies, consideration is given to the regulations and tax laws that apply to the specific facts and circumstances for any tax positions under evaluation. Management closely monitors tax developments on both the federal and state level in order to evaluate the effect they may have on the Company’s overall tax position and the estimates and judgments used in determining the income tax provision and records adjustments, as necessary.

Current wording

The Company’s income tax expense, deferred tax assets and liabilities, and reserves for unrecognized tax benefits reflect management’s best assessment of estimated taxes due. The calculation of each component of the Company’s income tax provision is complex and requires the use of estimates and judgments in its determination. As part of the Company’s evaluation and implementation of business strategies, consideration is given to the regulations and tax laws that apply to the specific facts and circumstances for any tax position under evaluation. Management closely monitors tax developments on both the federal and state level in order to evaluate the effect they may have on the Company’s overall tax position and the estimates and judgments used in determining the income tax provision and records adjustments, as necessary.

Previous wording

The commercial real estate (“CRE”) sector has been impacted significantly by rising interest rates and rising vacancies, increasing the prospect of default that borrowers may face due to the record amount of upcoming maturities. In addition, the office market continues to struggle with fewer employees in the office after the COVID-19 pandemic. The Bank continues to monitor its commercial real estate portfolio by reviewing various credit risk and concentration reports. However, in late 2024 interest rates began falling, and in January 2025 the U.S. president signed an executive order requiring all federal employees to return to offices on a five-day-a-week basis. Additionally, several large private-sector employers instituted similar return to office mandates in 2024. The start of the U.S. federal government’s new fiscal year began October 1, 2025, without the passage of Appropriation Acts or a Continuing Resolution (“CR”) and the government began its shutdown procedures, which included furloughing government civilian employees. It is unclear at this time when either a CR or Appropriations Act will be enacted. Notwithstanding the government shutdown, we would expect the federal return to office mandate, combined with mandates at private sector employers and decreasing interest rates could help the region’s CRE office market; however, we cannot be certain that this would be the case or the degree to which such mandates may improve the CRE sector in our markets in 2025, if at all. Additionally, recent reductions (including during the government shutdown), and possible further reductions, in the federal workforce, combined with general economic uncertainty as a result of federal trade and other policies could continue to challenge the economy and impact the CRE sector. The Bank’s exposure to CRE at September 30, 2025, was $2.8 billion, or 50.4%, of its gross loan portfolio, not including owner-occupied commercial real estate and acquisition, construction & development. Commercial real estate as a percent of total assets at September 30, 2025, was 35.5%, not including owner-occupied commercial real estate and acquisition, construction & development. Including owner-occupied commercial real estate and acquisition, construction & development, total exposure was at $3.8 billion, or 68.1%, of our total gross loans and 48.1% of total assets at September 30, 2025.

Current wording

The Bank continues to monitor its commercial real estate portfolio by reviewing various credit risk and concentration reports. The Bank’s exposure to CRE at March 31, 2026, was $2.8 billion, or 51.9%, of its gross loan portfolio, not including owner-occupied commercial real estate and acquisition, construction & development. Commercial real estate as a percent of total assets at March 31, 2026, was 35.4%, not including owner-occupied commercial real estate and acquisition, construction & development. Including owner-occupied commercial real estate and acquisition, construction & development, total exposure was at $3.7 billion, or 69.1%, of our total gross loans and 47.2% of total assets at March 31, 2026.

Previous wording

The tables below present the Bank’s commercial real estate, owner-occupied commercial real estate, and acquisition, construction & development portfolios by collateral type and geographic location as of September 30, 2025 (in thousands).

Current wording

The tables below present the Company’s commercial real estate, owner-occupied commercial real estate, and acquisition, construction & development portfolios by collateral type and geographic location as of March 31, 2026 (in thousands).

Previous wording

CRE loans are monitored through various processes that include payment monitoring, financial reporting, and covenant compliance monitoring, and annual reviews for larger relationships. Furthermore, construction loans are monitored throughout the life of the project and the construction loan administration function is centralized within the Credit Risk Management team. Monitoring the market conditions is also an important component of prudent CRE risk management. Quarterly construction progress reviews are also completed on acquisition, construction & development loans. For each loan, management reviews the adequacy of the construction budget, adequacy of the interest reserve, pace of construction, and review of any loan covenants.

Current wording

CRE loans are monitored through various processes that include payment monitoring, financial reporting, and covenant compliance monitoring, and annual reviews for larger relationships. Furthermore, construction loans are monitored throughout the life of the project and the construction loan administration function is centralized within the Credit Risk Management team. Monitoring the market conditions is also an important component of prudent CRE risk management. Quarterly construction progress reviews are also completed on all acquisition, construction & development loans. For each loan, management reviews the adequacy of the construction budget, adequacy of the interest reserve, pace of construction, and review of any loan covenants.

Previous wording

The Bank believes its underwriting and monitoring standards for commercial real estate loans are sufficient to evaluate its loan portfolio and keep it from incurring significant losses. The largest concentration of the Bank’s commercial real estate loans are in Virginia (approximately 47.3%), and the Bank does not have significant exposure to any economic areas of the country that are underperforming the national economy. Additionally, the Bank’s overall exposure to the “Office Building / Condo” collateral type is 16.5% of total commercial real estate loans, including owner-occupied commercial real estate and acquisition, construction & development. The Bank believes that the combined loan portfolio is well-diversified, generally seasoned, manageable, and will outperform the industry in terms of performance through the economic cycle; however, our underwriting, review, and monitoring cannot eliminate all of the risks related to these loans. For further discussion see Part II, Item 1A. “Risk Factors”.

Current wording

The Bank believes its underwriting and monitoring standards for commercial real estate loans are sufficient to evaluate its loan portfolio and keep it from incurring significant losses. The largest concentration of the Bank’s commercial real estate loans are in Virginia (approximately 49.6%), and the Bank does not have significant exposure to any economic areas of the country that are underperforming the national economy. Additionally, the Bank’s overall exposure to the “Office Building / Condo” collateral type is 17.3% of total commercial real estate loans, including owner-occupied commercial real estate and acquisition, construction & development. The Bank believes that the combined loan portfolio is well-diversified, generally seasoned, manageable, and will outperform the industry in terms of performance through the economic cycle; however, our underwriting, review, and monitoring cannot eliminate all of the risks related to these loans. For further discussion see Part II, Item 1A. “Risk Factors”.

Previous wording

The Company assesses the need for liquidity in a variety of scenarios. Those scenarios may include projected growth, credit deterioration, deposit decay, interest rate changes, and a variety of other economic scenarios that can impact the liquidity position of the Company. These analyses are performed on a quarterly basis in conjunction with the Company’s Asset/Liability meetings, and findings are reported to the Asset/Liability Committee (the “ALCO”) and to the Board. From time to time, management may change the frequency of such testing or update certain inputs as a result of abnormal market conditions.

Current wording

The Company assesses the need for liquidity in a variety of scenarios. Those scenarios may include projected growth, credit deterioration, deposit decay, interest rate changes, and a variety of other economic scenarios that can impact the liquidity position of the Company. These analyses are performed on a quarterly basis in conjunction with the Company’s Asset/Liability meetings, and findings are reported to the Asset and Liability Management Committee (the “ALCO”) and to the Board. From time to time, management may change the frequency of such testing or update certain inputs as a result of abnormal market conditions.

Previous wording

Applicable capital rules under the Basel III Framework require the Company and the Bank to maintain minimum Common Equity Tier 1 (“CET 1”), Tier 1, and Total Capital ratios, along with a capital conservation buffer, effectively resulting in new minimum capital ratios. The capital conservation buffer is designed to absorb losses during periods of economic stress. Banking institutions with a ratio of CET 1 capital to risk-weighted assets above the minimum but below the conservation buffer (or below the combined capital conservation buffer and counter-cyclical capital buffer, when the latter is applied) will face constraints on dividends, equity repurchases, and compensation based on the amount of the shortfall. The Basel III Framework also provides for a “counter-cyclical capital buffer” that is applicable to only certain covered institutions and does not have any current applicability to the Company or the Bank.

Current wording

Applicable capital rules under the Basel III Framework require the Company and the Bank to maintain minimum Common Equity Tier 1 (“CET 1”), Tier 1, and Total Capital ratios, along with a capital conservation buffer, effectively resulting in new minimum capital ratios. The capital conservation buffer is designed to absorb losses during periods of economic stress. Banking institutions with a ratio of CET 1 capital to risk-weighted assets above the minimum but below the conservation buffer (or below the combined capital conservation buffer and counter-cyclical capital buffer, when the latter is applied) will face constraints on dividends, equity repurchases, and compensation based on the amount of the shortfall. The Basel III Framework also provide for a “counter-cyclical capital buffer” that is applicable to only certain covered institutions and does not have any current applicability to the Company or the Bank.

Previous wording

•The ability to make investments to promote compliance with existing and evolving regulatory requirements that will increase as the Company grows and will result in increased administrative expenses that we did not previously incur, which costs may materially increase our general and administrative expenses.

Current wording

•The ability to make investments to promote compliance with existing and evolving regulatory requirements that will increase as the Company grows and will result in increased administrative expenses that we did not previously incur, which costs may materially increase our general and administrative expenses, and

Previous wording

The following table contains selected historical consolidated financial data as of the dates and for the periods shown. The selected balance sheet data as of September 30, 2025, and September 30, 2024, and the selected income statement data for the three and nine months ended September 30, 2025, and September 30, 2024, have been derived from our consolidated financial statements included elsewhere in this Form 10-Q and in other filings we have submitted with the SEC and should be read in conjunction with the other information contained in this Form 10-Q.

Current wording

The following table contains selected historical consolidated financial data as of the dates and for the periods shown. The selected balance sheet data as of March 31, 2026, and March 31, 2025, and the selected income statement data for the three months ended March 31, 2026, and March 31, 2025, have been derived from our consolidated financial statements included elsewhere in this Form 10-Q and in other filings we have submitted with the SEC and should be read in conjunction with the other information contained in this Form 10-Q.

Previous wording

(1) The dividend payout ratio represents per share dividends declared divided by diluted earnings per share.

Current wording

(1) Common stock dividend payout ratio represents per share dividends declared divided by diluted earnings per share.

Previous wording

(2) Return on average equity computed using total average equity at period-end.

Current wording

(2) Return on average common equity computed using total average common equity at period-end.

Previous wording

Net income applicable to common shares for the three months ended September 30, 2025, was $29.7 million, compared to net income applicable to common shares of $27.4 million during the three months ended September 30, 2024. The $2.3 million increase was due to a decrease in interest expense, partially offset by a decrease in interest income, an increase in non-interest income, and a decrease in non-interest expense for the three months ended September 30, 2025, compared to the three months ended September 30, 2024.

Current wording

Net income applicable to common shares for the three months ended March 31, 2026, was $27.1 million, compared to net income applicable to common shares of $27.0 million during the three months ended March 31, 2025. The $0.1 million increase was due to a decrease in interest expense, and an increase in non-interest income, partially offset by a decrease in interest income, and an increase in non-interest expense for the three months ended March 31, 2026, compared to the three months ended March 31, 2025.

Previous wording

Net interest income increased by $591.0 thousand to $73.8 million for the three months ended September 30, 2025, compared to $73.2 million for the three months ended September 30, 2024. The main driver for this increase was results that reflect lower rates on interest-bearing liabilities which was partially offset by a decline in interest income, primarily related to lower accretion income, when compared to the three months ended September 30, 2024.

Current wording

Net interest income decreased by $1.1 million to $71.8 million for the three months ended March 31, 2026, compared to $73.0 million for the three months ended March 31, 2025. The main driver for this decrease was results that reflect lower interest income, primarily related to lower accretion income, which was partially offset by lower interest expense when compared to the three months ended March 31, 2025.

Previous wording

For the three months ended September 30, 2025, the Company recorded credit provision expense of $262.0 thousand compared to a provision of $147.0 thousand for the three months ended September 30, 2024. For the three months ended September 30, 2025, credit loss expense on loans and AFS securities was $574.0 thousand compared to $85.0 thousand for the three months ended September 30, 2024. For the three months ended September 30, 2025, the increase in credit loss expense on loans and AFS securities was offset by a credit loss recapture of $312.0 thousand on off-balance sheet credit exposures. For the three months ended September 30, 2024, there was a credit loss expense of $62.0 thousand on off-balance sheet credit exposures.

Current wording

For the three months ended March 31, 2026, the Company recorded credit provision expense of $12.0 thousand compared to a provision of $501.0 thousand for the three months ended March 31, 2025. For the three months ended March 31, 2026, credit loss expense on loans and AFS securities was $213.0 thousand compared to $900.0 thousand for the three months ended March 31, 2025. For the three months ended March 31, 2026, credit loss expense on loans and AFS securities was offset by a credit expense recapture of $201.0 thousand on off-balance sheet credit exposures. For the three months ended March 31, 2025, credit loss expense on loans and AFS securities was offset by a credit expense recapture of $398.8 thousand on off-balance sheet credit exposures.

Previous wording

Non-interest income increased by $1.0 million, or 9.1%, to $11.6 million for the three months ended September 30, 2025, as compared to $10.6 million for the three months ended September 30, 2024. Increases in fiduciary and wealth management, net gains on securities, bank debit and other card revenue, and other non-interest income exceeded declines in service charges and fees income and income from company-owned life insurance for the three months ended September 30, 2025, compared to the three months ended September 30, 2024.

Current wording

Non-interest income increased by $2.8 million, or 28.2%, to $12.9 million for the three months ended March 31, 2026, as compared to $10.0 million for the three months ended March 31, 2025. Increases in fiduciary and wealth management, net gains on securities, income from company-owned life insurance, and other non-interest income exceeded declines in service charges and fees income and bank debit and other card revenue for the three months ended March 31, 2026, compared to the three months ended March 31, 2025.

Previous wording

Net interest income totaled $73.8 million for the three months ended September 30, 2025, compared to $73.2 million for the three months ended September 30, 2024. The increase in net interest income was primarily driven by results that reflect lower rates on interest-bearing liabilities which was partially offset by a decline in interest income, primarily related to lower accretion income, when compared to the three months ended September 30, 2024. Accretion income associated with acquired loans totaled $8.2 million for the three months ended September 30, 2025, compared to $15.5 million for the three months ended September 30, 2024. Amortization expense associated with fair value marks for time deposits, subordinated debt, and trust preferred securities totaled $1.4 million for the three months ended September 30, 2025, compared to $3.8 million for the three months ended September 30, 2024.

Current wording

Net interest income totaled $71.8 million for the three months ended March 31, 2026, compared to $73.0 million for the three months ended March 31, 2025. The decrease in net interest income was primarily driven by results that reflect lower interest income, primarily related to lower accretion income, partially offset by lower interest expense related to lower deposit rates when compared to the three months ended March 31, 2025. Accretion income associated with acquired loans totaled $6.8 million for the three months ended March 31, 2026, compared to $11.4 million for the three months ended March 31, 2025. Amortization expense associated with fair value marks for time deposits, subordinated debt, and trust preferred securities totaled $1.4 million for the three months ended March 31, 2026, compared to $2.2 million for the three months ended March 31, 2025.

Previous wording

The tax-adjusted net interest margin was 4.08% for the three months ended September 30, 2025, compared to 4.07% for the three months ended September 30, 2024. The increase in tax-adjusted net interest margin was primarily driven by results that reflect lower rates on interest-bearing liabilities, partially offset by a decline in interest income, primarily related to lower accretion income, when compared to the three months ended September 30, 2024.

Current wording

The tax-adjusted net interest margin was 4.09% for the three months ended March 31, 2026, compared to 4.18% for the three months ended March 31, 2025. The decrease in tax-adjusted net interest margin was primarily driven by results that reflect lower interest income, primarily related to lower accretion income, partially offset by lower interest expense related to lower deposit rates, when compared to the three months ended March 31, 2025.

Previous wording

The yield for the taxable loan portfolio was 6.76% for the three months ended September 30, 2025, compared to 7.34% for the three months ended September 30, 2024. The decrease was primarily the result of lower accretion income for three months ended September 30, 2025 compared to the three months ended September 30, 2024.

Current wording

The yield for the taxable loan portfolio was 6.64% for the three months ended March 31, 2026, compared to 6.96% for the three months ended March 31, 2025. The decrease was primarily the result of lower accretion income for three months ended March 31, 2026 compared to the three months ended March 31, 2025.

Previous wording

The tax-adjusted yield on the total investment securities portfolio was 3.97% for the three months ended September 30, 2025, compared to 3.91% for the three months ended September 30, 2024. The increase was primarily the result of an increase in balance of higher-yielding securities for the three months ended September 30, 2025, compared to the three months ended September 30, 2024.

Current wording

The tax-adjusted yield on the total investment securities portfolio was 4.05% for the three months ended March 31, 2026, compared to 3.85% for the three months ended March 31, 2025. The increase was primarily the result of an increase in balance of higher-yielding securities for the three months ended March 31, 2026, compared to the three months ended March 31, 2025.

Previous wording

The yield on interest-bearing deposits decreased to 2.37% during the three months ended September 30, 2025, from 3.02% during the three months ended September 30, 2024. The decrease was primarily due to lower market interest rates on deposit products reflecting decreases in the Federal Funds Rate and other market rates.

Current wording

The yield on interest-bearing deposits decreased to 2.16% during the three months ended March 31, 2026, from 2.53% during the three months ended March 31, 2025. The decrease was primarily due to lower market interest rates on deposit products reflecting decreases in the Federal Funds Rate and other market rates.

Previous wording

The yield on our short-term borrowings for the three months ended September 30, 2025, was 3.85%, compared to 4.06% for the three months ended September 30, 2024. The decrease was due to decreases in the Federal Funds Rate and other short-term market rates and the addition of derivative swaps that decreased our cost of borrowing. The yield on our subordinated debt assumed in the Merger was 9.49% for the three months ended September 30, 2025, compared to 10.16% for the three months ended September 30, 2024.

Current wording

The yield on our short-term borrowings for the three months ended March 31, 2026, was 3.78%, compared to 3.88% for the three months ended March 31, 2025. The decrease was due to decreases in the Federal Funds Rate and other short-term market rates and the addition of derivative swaps that decreased our cost of borrowing. The yield on our subordinated debt assumed in the Summit Merger was 10.46% for the three months ended March 31, 2026, compared to 9.85% for the three months ended March 31, 2025.

Previous wording

Total interest income was $111.2 million for the three months ended September 30, 2025, compared to $118.5 million for the three months ended September 30, 2024, a decrease of 6.2%. The decrease in interest income was primarily due to lower accretion income when compared to the three months ended September 30, 2024. Interest income on loans decreased by $8.6 million and interest income on securities increased $714.0 thousand, for the three months ended September 30, 2025, compared to the three months ended September 30, 2024. Accretion income associated with acquired loans totaled $8.2 million for the three months ended September 30, 2025, compared to $15.5 million for the three months ended September 30, 2024.

Current wording

Total interest income was $105.5 million for the three months ended March 31, 2026, compared to $110.8 million for the three months ended March 31, 2025, a decrease of 4.8%. The decrease in interest income was primarily due to lower accretion income when compared to the three months ended March 31, 2025. Interest income on loans decreased by $9.0 million and interest income on securities increased $3.1 million, for the three months ended March 31, 2026, compared to the three months ended March 31, 2025. Accretion income associated with acquired loans totaled $6.8 million for the three months ended March 31, 2026, compared to $11.4 million for the three months ended March 31, 2025.

Previous wording

Total interest expense was $37.4 million for the three months ended September 30, 2025, compared to $45.3 million for the three months ended September 30, 2024. The decrease in interest expense was due to results that reflect lower rates on interest-bearing liabilities, and lower amortization expense associated with fair value marks for liabilities acquired in the Merger. Interest expense on interest-bearing deposits decreased by $9.2 million for the three months ended September 30, 2025, compared to the three months ended September 30, 2024, due to lower market rates. Interest on subordinated debt acquired in the Merger was $2.7 million for the three months ended September 30, 2025, compared to $2.8 million for the three months ended September 30, 2024. Interest expense on short-term borrowings amounted to $4.4 million for the three months ended September 30, 2025, compared to $3.1 million for the three months ended September 30, 2024, due to higher average balances. Amortization expense associated with fair value marks for time deposits, subordinated debt, and trust preferred securities totaled $1.4 million for the three months ended September 30, 2025, compared to $3.8 million for the three months ended September 30, 2024.

Current wording

Total interest expense was $33.6 million for the three months ended March 31, 2026, compared to $37.8 million for the three months ended March 31, 2025. The decrease in interest expense was due to results that reflect lower rates on interest-bearing liabilities, and lower amortization expense associated with fair value marks for liabilities acquired in the Summit Merger. Interest expense on interest-bearing deposits decreased by $5.1 million for the three months ended March 31, 2026, compared to the three months ended March 31, 2025, due to lower market rates. Interest on subordinated debt acquired in the Summit Merger was $2.3 million for the three months ended March 31, 2026, compared to $2.7 million for the three months ended March 31, 2025. Interest expense on short-term borrowings amounted to $4.6 million for the three months ended March 31, 2026, compared to $3.2 million for the three months ended March 31, 2025, due to higher average balances. Amortization expense associated with fair value marks for time deposits, subordinated debt, and trust preferred securities totaled $1.4 million for the three months ended March 31, 2026, compared to $2.2 million for the three months ended March 31, 2025.

Previous wording

The provision for credit losses was $262.0 thousand for the three months ended September 30, 2025, compared to a provision of $147.0 thousand for the three months ended September 30, 2024. For the three months ended September 30, 2025, credit loss expense on loans and AFS securities was $574.0 thousand compared to $85.0 thousand for the three months ended September 30, 2024. For the three months ended September 30, 2025, the increase in credit loss expense on loans and AFS securities was offset by a credit loss recapture of $312.0 thousand on off-balance sheet credit exposures. For the three months ended September 30, 2024, there was a credit loss expense of $62.0 thousand on off-balance sheet credit exposures.

Current wording

The provision for credit losses was $12.0 thousand for the three months ended March 31, 2026, compared to a provision of $501.0 thousand for the three months ended March 31, 2025. For the three months ended March 31, 2026, credit loss expense on loans and AFS securities was $213.0 thousand compared to $900.0 thousand for the three months ended March 31, 2025. For the three months ended March 31, 2026, credit loss expense on loans and AFS securities was offset by a credit expense recapture of $201.0 thousand on off-balance sheet credit exposures. For the three months ended March 31, 2025, credit loss expense on loans and AFS securities was offset by a credit expense recapture of $398.8 thousand on off-balance sheet credit exposures.

Previous wording

Non-interest income increased 9.1% for the three months ended September 30, 2025, compared to the three months ended September 30, 2024. The largest dollar and percentage increase was a $989.0 thousand increase in other non-interest income for the three months ended September 30, 2025, compared to the three months ended September 30, 2024. This increase was driven by an increase in the utilization of services and fees in other non-interest income categories for the three months ended September 30, 2025, compared to the three months ended September 30, 2024. Increases in fiduciary and wealth management, net gains on securities, bank debit and other card revenue, and other non-interest income exceeded declines in service charges and fees income and income from company-owned life insurance for the three months ended September 30, 2025, compared to the three months ended September 30, 2024. The fiduciary and wealth management increase was driven by increased wealth and fiduciary services performance, while the increase in net gains from securities was driven by security sales.

Current wording

Non-interest income increased 28.2% for the three months ended March 31, 2026, compared to the three months ended March 31, 2025. The largest dollar increase was a $1.8 million increase in net gains on securities for the three months ended March 31, 2026, compared to the three months ended March 31, 2025. This increase was driven by an increase in sales in our AFS securities portfolio for the three months ended March 31, 2026, compared to the three months ended March 31, 2025. Increases in fiduciary and wealth management, income from company-owned life insurance, and other non-interest income exceeded declines in service charges and fees income and bank debit and other card revenue for the three months ended March 31, 2026, compared to the three months ended March 31, 2025. The fiduciary and wealth management increase was driven by increased wealth and fiduciary services performance.

Previous wording

Non-interest expense decreased $2.7 million, or 5.4%, for the three months ended September 30, 2025, compared to the three months ended September 30, 2024. The decrease was primarily driven by continued operating efficiency gains, post-merger, that were realized after the merger and during the three months ended September 30, 2025, compared to the three months ended September 30, 2024. The largest dollar decrease for the three months ended September 30, 2025, compared to the three months ended September 30, 2024 was $791.0 thousand for equipment rentals, depreciation and maintenance, mostly driven by continued operating efficiencies, while core deposit intangible amortization declined due to its accelerated amortization method. ATM, card and network expense, pensions and other employee benefits, and other non-interest expense also declined due to continued operating efficiencies for the three months ended September 30, 2025, compared to the three months ended September 30, 2024. See Note 13 — Other Operating Expense in Notes to Consolidated Financial Statements for further information on “Other” non-interest expense.

Current wording

Non-interest expense increased $1.7 million, or 3.5%, for the three months ended March 31, 2026, compared to the three months ended March 31, 2025. The increase was primarily driven by increases in salaries and wages, pensions and other employee benefits, equipment rentals, depreciation and maintenance, FDIC and other regulatory assessments, and other operating expenses for the three months ended March 31, 2026, compared to the three months ended March 31, 2025. The largest dollar increase for the three months ended March 31, 2026, compared to the three months ended March 31, 2025 was a $1.3 million increase in other operating expenses, mostly driven by an increase in merger related expenses. The largest dollar decrease was a $614.0 thousand decrease in core deposit intangible amortization which declined due to its accelerated amortization method. See Note 13 — Other Operating Expense in Notes to Consolidated Financial Statements for further information on “Other” non-interest expense.

Previous wording

Income tax expense was $7.0 million for the three months ended September 30, 2025, an increase of $1.8 million from the tax expense of $5.2 million for the three months ended September 30, 2024. The increase was due to the increase in net income and additional state taxes incurred in the combined market area after the Merger, for the three months ended September 30, 2025, when compared to the three months ended September 30, 2024. For the three months ended September 30, 2025, the effective tax rate was 19.0%, while the effective tax rate was 15.8% for September 30, 2024.

Current wording

Income tax expense was $6.0 million for the three months ended March 31, 2026, an increase of $310.0 thousand from the tax expense of $5.6 million for the three months ended March 31, 2025. The increase was mostly due to additional state taxes incurred in the combined market area after the Summit Merger, for the three months ended March 31, 2026, when compared to the three months ended March 31, 2025. For the three months ended March 31, 2026, the effective tax rate was 17.9%, while the effective tax rate was 17.2% for March 31, 2025.

Previous wording

Assets increased by $76.9 million to $7.9 billion as of September 30, 2025, compared to $7.8 billion as of December 31, 2024. Loans, net of ACL, decreased by $112.3 million from $5.6 billion as of December 31, 2024, to $5.5 billion as of September 30, 2025. Deposits decreased by $103.2 million and amounted to $6.4 billion at September 30, 2025, compared to $6.5 billion at December 31, 2024. Short-term borrowings increased by $85.0 million to $450.0 million as of September 30, 2025, compared to $365.0 million at December 31, 2024. Subordinated debt and subordinated debt owed to unconsolidated subsidiary trusts, which were assumed in the Merger, totaled $86.1 million at September 30, 2025, compared to $111.9 million at December 31, 2024. During the quarter ended September 30, 2025, $30.0 million of subordinated debt was redeemed by the Company.

Current wording

Assets increased by $7.1 million to $7.9 billion as of March 31, 2026, compared to $7.9 billion as of December 31, 2025. Loans, net of ACL, was essentially flat at $5.3 billion as of March 31, 2026, increasing by $16.9 million from December 31, 2025. Deposits decreased by $71.7 million and amounted to $6.3 billion at March 31, 2026, compared to $6.4 billion at December 31, 2025. Short-term borrowings increased by $75.0 million to $525.0 million as of March 31, 2026, compared to $450.0 million at December 31, 2025. Subordinated debt and subordinated debt owed to unconsolidated subsidiary trusts, which were assumed in the Summit Merger, totaled $88.8 million at March 31, 2026, compared to $87.5 million at December 31, 2025.

Previous wording

Our investments provide a source of liquidity because we can pledge them to support borrowed funds or can liquidate them to generate cash proceeds. Our investment portfolio is also a resource in managing interest rate risk because the maturity and interest rate characteristics of this asset class can be modified to match changes in the loan and deposit portfolios. The majority of our AFS investment portfolio is comprised of obligations of states and municipalities and residential mortgage-backed securities. During the nine months ended September 30, 2025, the unrealized losses on our holdings decreased $33.6 million from December 31, 2024.

Current wording

Our investments provide a source of liquidity because we can pledge them to support borrowed funds or can liquidate them to generate cash proceeds. Our investment portfolio is also a resource in managing interest rate risk because the maturity and interest rate characteristics of this asset class can be modified to match changes in the loan and deposit portfolios. The majority of our AFS investment portfolio is comprised of obligations of states and municipalities and residential mortgage-backed securities. During the three months ended March 31, 2026, the unrealized losses on our holdings increased $14.6 million from December 31, 2025.

Previous wording

The Company’s asset quality metrics remain within the Company’s risk profile with adequate reserve coverage. The Company’s nonaccrual loan balances increased by $49.6 million from December 31, 2024, while the Company’s loans 90 days past due and still accruing increased $1.0 million from December 31, 2024. The Company’s non-performing assets, which includes non-performing loans consisting of non-accrual loans, loans that are more than 90 days past due and still accruing, and other real estate owned as of September 30, 2025, totaled $91.8 million, an increase of $50.6 million from $41.2 million at December 31, 2024.

Current wording

The Company’s asset quality metrics remain within the Company’s risk profile with adequate reserve coverage. The Company’s nonaccrual loan balances increased by $3.7 million from December 31, 2025, while the Company’s loans 90 days past due and still accruing increased $577.0 thousand from December 31, 2025. The Company’s non-performing assets, which includes non-performing loans consisting of non-accrual loans, loans that are more than 90 days past due and still accruing, and other real estate owned as of March 31, 2026, totaled $81.7 million, an increase of $4.7 million from $76.9 million at December 31, 2025.

Previous wording

The Company recorded a provision expense of $574.0 thousand and a provision of $85.0 thousand on loans for the three months ended September 30, 2025, and September 30, 2024, respectively, and a provision of $2.2 million and a provision of $19.5 million on loans for the nine months ended September 30, 2025, and September 30, 2024, respectively. For the nine months ended September 30, 2024, the Company recorded a $23.9 million provision directly to the allowance for credit losses to establish an allowance for acquired PCD loans. This allowance for acquired PCD loans did not result in an additional provision expense for the nine months ended September 30, 2024.

Current wording

The Company recorded a provision expense of $213.0 thousand and a provision of $900.0 thousand on loans for the three months ended March 31, 2026, and March 31, 2025, respectively.

Previous wording

Gross charged-off loans were $519.0 thousand and $305.0 thousand for the three months ended September 30, 2025, and September 30, 2024, respectively and $3.5 million and $947.0 thousand for the nine months ended September 30, 2025, and September 30, 2024, respectively. Gross recoveries totaled $293.0 thousand and $20.0 thousand for the three months ended September 30, 2025, and September 30, 2024, respectively and $856.0 thousand and $38.0 thousand for the nine months ended September 30, 2025, and September 30, 2024, respectively. The ACL as a percentage of gross loans, net of unearned income, was 1.22% and 1.22% as of September 30, 2025, and September 30, 2024, respectively.

Current wording

Gross charged-off loans were $490.0 thousand and $1.4 million for the three months ended March 31, 2026, and March 31, 2025, respectively. Gross recoveries totaled $409.0 thousand and $237.0 thousand for the three months ended March 31, 2026, and March 31, 2025, respectively. The ACL as a percentage of gross loans, net of unearned income, was 1.26% and 1.20% as of March 31, 2026, and March 31, 2025, respectively.

Previous wording

The following table summarizes the changes in the Company’s credit loss experience by portfolio for the three and nine months ended September 30, 2025, and 2024 (dollars in thousands):

Current wording

The following table summarizes the changes in the Company’s credit loss experience by portfolio for the three months ended March 31, 2026, and 2025 (dollars in thousands):